Mahrukh A Mughal
THE Brexit process began on 23 June 2016 when the United Kingdom voted to leave the EU. The residents decided that the benefits of belonging to the unified monetary body no longer outweighed the costs of free movement of immigrants. The vote was 17.4 million in favour of leaving versus 15.1 million who voted to remain. On 29 March 2017, former U.K. Prime Minister Theresa May submitted the Article 50 withdrawal notification to the EU. On 24 July 2019, Boris Johnson replaced Theresa May as the UK’s Prime Minister. Johnson’s Conservative party attained a majority during a royally mandated general election on 12 Dec 2019. As a result, Brexit is committed to its withdrawal Agreement.
On 23 Jan 2020, the Agreement Act received Royal Assent. This is the legislation that will implement the withdrawal agreement negotiated by the UK and the EU. Johnson’s agreement is very similar to the one negotiated by Theresa May. One main difference is that the UK would not be in a “customs union” with the EU. That includes UK member Northern Ireland. But it allows Northern Ireland to adopt EU customs rules in keeping with the Republic of Ireland, an EU member. This avoids a hard border between the two. That means there will be a customs and regulatory border between Great Britain and Northern Ireland in the Irish Sea. The EU and UK will negotiate a trade agreement that will probably impose tariffs on each other’s imports. This won’t apply to goods already purchased or in process.
The 3 million European nationals already living in the UK will continue to live and work in the country without work visas. The 1.3 million UK citizens will continue to do the same in the EU. For the future, the UK has proposed an immigration system based on workers’ skills. The UK must pay a “divorce bill” of 33 billion pounds to fulfil any remaining financial commitments. The EU and the UK must negotiate trade agreements by Nov. 26 for it to be approved by Parliament in 2020. Otherwise, the UK must request an extension from the EU. If a trade deal or extension is not completed in time, the UK will revert to the same tariffs with the EU as other World Trade Organization members. The UK has already suffered from Brexit. The economy has slowed, and many businesses have moved their headquarters to the EU. There will be impact on growth, trade and jobs.
There would also be consequences specific to Ireland, London, and Scotland. Uncertainty over Brexit slowed the UK’s growth from 2.4% in 2015 to 1.5% in 2018.The UK government estimated that Brexit would lower the UK’s growth by 6.7% over 15 years. That’s if there is a trade agreement but restrictions on immigration. The British pound fell from $1.48 on the day of the referendum to $1.36 the next day. That helps exports but increases the prices of imports. According to a report 3 trillion pounds were taken out of Britain after the Brexit vote. Besides the Brexit has resulted in a diminished role for London as the financial capital of the world.
International companies would no longer use London as their H/Q. Goldman Sachs, JP Morgan, and Morgan Stanly have already switched 10% of their clients. Bank of America has transferred 100 bankers to its Dublin office and 400 to Paris. In the Trade area, Britain would face duties on its exports to EU countries thus affecting its exports and imports from EU countries would become more expensive. The UK would lose the advantages of the EU’s state-of-the-art technologies, the EU grants these to its members in environmental protection, research and development, and energy. Northern Ireland would remain with the United Kingdom. The Republic of Ireland, with which it shares a border, would stay a part of the EU. Johnson’s plan avoided a customs border between the two Irish countries. A customs border could have reignited the troubles. There was a 30-year conflict in Northern Ireland between mainly Catholic Irish nationalists and pro-British Protestants. In 1998, it ended with the promise of no border between Northern Ireland and Ireland. A customs border would have forced 9,500 commuters to go through customs on their way to and from work and school. Brexit would also affect the 2,100 workers who commute to Great Britain. Brexit vote has imposed three hard choices on the U. K (i) Leave with no deal, known as “no-deal Brexit”. Without a trade agreement, ports would be blocked and airlines grounded. In no time, imported food and drugs would run short. (ii) Vote again on Brexit. Many argue that voters did not understand the economic hardships that Brexit would impose. On December 10, 2018, the European Court of Justice ruled that the UK could unilaterally revoke its Brexit application to remain in the EU. (iii) Approve a negotiated deal. The sticking point had been the nature of the border between the UK’s Northern Ireland and the EU’s Republic of Ireland.
The Brexit vote has strengthened anti-immigration parties throughout Europe and given rise to Xenophobia. If these parties gain enough ground in France and Germany, they could force an anti-EU vote. If either of those countries left, the EU would lose its most robust economies and would become weaker and may ultimately dissolve. On the other hand, new polls show that the majority of EU citizens still strongly support the Union. Almost 75% say the EU promotes peace, and 55% believe it supports prosperity. More than a third sees the role of the U.K. as diminishing. Some political thinkers, analysts and economists are of the opinion that Brexit is a vote against globalization. It takes the United Kingdom off the main stage of the financial world and creates uncertainty throughout the UK as London desperately tries to keep its status as financial hub of Europe to attract international clients.
But the latest debate on “overriding” the agreement, already reached regarding “customs union” and Northern Ireland, is seriously jeopardizing the credibility of Britain and Prime Minister, Boris Johnson. Johnson’s decision to ignore and override signed agreement with EU will have far reaching legal implications and ramifications. It will most likely be challenged by EU leaders as their mood indicates. They can also invoke WTO jurisdiction in this case and Britain will have no moral and legal ground to justify it. The EU leaders have responded firmly and threatened legal action if Britain goes back on its word. The next week is, therefore, going to be very eventful to see which way the wind blows.
—The writer is an author of ‘2020 & Beyond’ and teaches International Political Affairs.
